UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

INVESTMENT ADVISERS ACT OF 1940
Release No. 1965 / August 10, 2001

ADMINISTRATIVE PROCEEDING
File No. 3-10551

In the Matter of

DAVID CLARK STEWART,

Respondent.

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ORDER INSTITUTING PUBLIC
ADMINISTRATIVE PROCEEDING,
MAKING FINDINGS, AND IMPOSING
REMEDIAL SANCTION

I.

The Securities and Exchange Commission ("Commission") deems it appropriate that a public administrative proceeding pursuant to Section 203(f) of the Investment Advisers Act of 1940 ("Advisers Act") be instituted against David Clark Stewart ("Stewart").

II.

In anticipation of the institution of this proceeding, Stewart has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. Solely for the purpose of this proceeding and any other proceedings brought by or on behalf of the Commission or in which the Commission is a party, and without admitting or denying the findings contained herein, except that Stewart admits the jurisdiction of the Commission over him and over the subject matter of this proceeding and the entry of a Final Judgment of Permanent Injunction and Other Relief as set forth in paragraph III.B., Stewart consents to the findings and the imposition of the sanction contained in this Order Instituting Public Administrative Proceeding, Making Findings, and Imposing Remedial Sanction ("Order") set forth below.

Accordingly, IT IS ORDERED that a proceeding pursuant to Section 203(f) of the Advisers Act be, and hereby is, instituted.

III.

On the basis of this Order, and the Offer submitted by Stewart, the Commission finds that:

A. Stewart, age 37, resides in Santa Monica, California. Stewart conducted his investment advisory business under the name of Stonehedge Capital LLC ("Stonehedge Capital"). Neither Stewart nor Stonehedge Capital was registered with the Commission as an investment adviser.

B. On July 19, 2001, Stewart was permanently enjoined by final judgment of the United States District Court for the Central District of California, in Securities and Exchange Commission v. David Clark Stewart, Case No. CV-01-06136 R (Ex) (the "Injunctive Action"), from future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act. Stewart consented, without admitting or denying the allegations of the Commission's Complaint, to the entry of the injunction.

C. The Commission's Complaint in the Injunctive Action alleged, in part, as follows: From approximately October 1996 through June 1999, Stewart acted as an unregistered investment adviser for approximately 25 clients. During this period, Stewart managed approximately $3 million. Stewart represented to his clients that he would invest their money in the stock market and that they could expect substantial returns from his trading activity. Contrary to these representations, Stewart invested only a portion of the funds of which he had physical custody in the stock market. Rather than using all of the funds as represented, Stewart misappropriated approximately $356,000 of client funds for his own personal benefit. He also used some client funds to cover trading losses and to repay some clients their principal. Furthermore, Stewart used some of the money to distribute supposed profits to clients. Finally, in addition to misusing client funds, Stewart sent at least two of his clients fictitious account statements and at least one client two fictitious trade confirmations.

IV.

On the basis of the foregoing, the Commission deems it appropriate to impose the sanctions specified in Stewart's Offer.

Accordingly, IT IS HEREBY ORDERED that Stewart be, and hereby is, barred from association with any investment adviser.